New To Texas? Consider Revising Your Estate Plan

Texas is one of the fastest-growing states in the nation, having topped the population growth list according to 2021 federal census data. If you’re planning to move to Texas soon, or recently have moved to Texas, you probably already have a list of benefits and reasons that attracted you to The Lone Star State. The implications that relocating to Texas will have on your estate plan may or may not have played a role in your decision. Either way it’s important to review your estate plan and see how Texas state laws affect your current plan, and how it can be revised so it’s tailored to your unique situation, ensuring that your final wishes are carried out in the state of Texas. Read on for a closer look at why if you are new to Texas, you should consider revising your estate plan.

This article is presented by the estate planning law firm of Holman Law LLP, located in Dallas, Texas. 

Estate and inheritance laws vary from state-to-state, so individuals new to Texas most likely need to change their estate plans to comply with, and benefit from, Texas law. In addition, property laws also vary from state-to-state, and could greatly impact your current estate plan and how your assets are passed to your beneficiaries. 

Anyone who has recently relocated to Texas, or will be relocating soon, should consult with an experienced Texas estate planning attorney, as evaluating and revising an estate plan can be complex.  Read on for more information about some common estate planning areas that are often impacted when individuals move to Texas. 

A major estate planning consideration is how the estate will be taxed. Unlike many other states, Texas does not impose an estate, or inheritance tax. This can greatly impact the way an estate plan was structured in another state, as some states do impose hefty estate taxes.  New Texas residents should have their estate plans evaluated by a Texas estate planning attorney to determine the impact state taxes will have and if revisions to the plan are needed. 

A will that has been properly executed in accordance with another state’s laws, should still be accepted in Texas. However, a will drawn up in another state will have been drafted to comply with that state’s laws regarding estates, property, and taxes. When a Texas resident dies, their estate is governed by Texas law, regardless of what state the documents were executed in. This may render certain provisions of the will obsolete or invalid. Most importantly, there are two types of probate administration, independent and dependent, in Texas. If the will is not drafted appropriately, the estate may have to be administered as a dependent administration, which can add five to ten times the cost and length to complete the administration. 

There are many reasons to use a trust when preparing your estate plan, and there are various types of trusts, each of which has its own advantages and disadvantages, depending on your particular financial and family situation. A few of these reasons and some special considerations when moving to Texas are as follows:

Bypass Probate With A Revocable Trust

In Texas, not all estates have to go through probate. Texas residents who wish to avoid the lengthy and expensive probate process can accomplish this by establishing a revocable trust. If you have moved to Texas and you still own real estate in another state, a revocable trust is highly recommended.  Otherwise, without a trust, your estate will not only have to go through probate in Texas, but will also go through probate in each state where you own real estate.  This means your estate will need to hire a lawyer in each state where you own real property to manage multiple probate cases.  A revocable trust easily avoids this costly and lengthy process.

Revise Your Living Trust To Include Your Texas Home

If you relocate to Texas and have a living trust executed in your previous state, it should still be valid. You should consider however, if the trust is funded with all of the assets that you want to pass directly to your beneficiaries. If you purchased a home when you moved to Texas, your trust may need to be revised to include the new residence. 

Texas Homestead Exemption 

An out-of-state trust usually does not contain the appropriate language to make your new Texas home eligible for the Texas Homestead exemption.  The Texas Homestead exemption is a savings of 20% to 30% of your property taxes which is meaningful since Texas property taxes are some of the highest in the nation.  Your trust must include this language before January 1 of the taxable year for your Texas homestead to receive this benefit.  A Texas estate planning attorney can assist you with revising your trust to be sure it qualifies.

One major consideration in estate planning is naming an estate executor. The executor, also known as the administrator, is the person responsible for distributing a decedent’s estate. When someone draws up their estate plan, they often choose someone who is close in proximity to them, but if the decedent moved out of state before their death, their executor might be very far away now. Although most states permit non-residents to serve as executors, in Texas non-residents are only able to serve as executors if they appoint a resident agent to accept service and manage all probate filings. Since each estate has its own set of unique circumstances and complexities, you should consult with a Texas estate planning attorney, who may recommend naming a Texas resident to serve as the estate executor. 

Often, the provisions that include medical directives, such as healthcare powers of attorney, vary from state to state. If a person is unable to make medical decisions for themselves and has an out of state healthcare power of attorney document, it could take more time for their agent to be able to exercise their decision making power because of the out of state document.  

Additionally, when selecting an agent to act on their behalf under a healthcare power of attorney, many people select an agent that lives near them. If the person moves across the country, and their agent does not, the person should consider changing their agent. Since the agent’s decisions have a huge impact on the person’s life, it is generally better that the agent is geographically close in case of emergencies. Otherwise, it may be difficult for an agent to make medical decisions on that person’s behalf from halfway across the country, especially in an emergency.  

These points of consideration are just a few of many that all new or future Texans should consider when it comes to estate plans. The great state of Texas offers many benefits to its residents and their estates. With thoughtful planning and the help of a Texas estate planning attorney, you can revise your estate plan documents to comply with, and benefit from, your new home state. 

If you live in the Dallas/Fort Worth area, contact the estate planning firm of Holman Law LLP for a consultation. Our office is located at 12222 Merit Plaza, Suite 1200 in Dallas, Texas. You can reach us by phone at (972) 474-7828 or on our website. We look forward to hearing from you.